Interview: Carole Kariuki
What impact has devolution had on the private sector outside of Nairobi and Mombasa?
CAROLE KARIUKI: Three things have happened as a result of devolution. First, it has opened a lot of opportunities for businesses. Many counties have begun to have investment forums and conferences to showcase what is on offer in the different regions of Kenya. The second thing is that it has allowed investors to deal with investment related issues at the local level. Lastly, counties are beginning to be creative in formulating investment opportunities that otherwise would have been overlooked at the federal level.
The challenge that remains is for the counties and the national government to determine and delineate their respective roles. Sometimes there are overlapping areas of responsibility that pose a challenge for investors. Counties are also in a place where they are settling themselves financially – many times they come up with levies that hinder business.
How would you rate the country’s public-private partnership (PPP) framework, and how can the private sector expand under Vision 2030?
KARIUKI: It’s a new framework and PPPs are mainly utilised in infrastructure projects, but I think we will begin to see them being used in other sectors of development in the near term. Based on the preliminary results being reported, we have submitted regulatory practice reforms that we would like to see take shape; however, we believe that the framework is working very well, particularly for large projects. In order to improve, I think Kenya needs to focus on developing more bankable projects.
There is a lot of room for the private sector to expand in Vision 2030, especially in the economic sector. When you look at the five areas in the economic pillar, there are a lot of opportunities for the private sector to play a role. It is important to understand that government is a facilitator. The largest role for the private sector in Vision 2030 is to invest, and to create wealth and jobs.
I think where the private sector has lagged behind in particular is in the agriculture sector, and specifically agro-processing. This is an area of critical importance for job creation in the economy.
In what ways will the interest rate cap affect private sector borrowing?
KARIUKI: It is too early to tell. I think it takes around six months to really feel the impact. The private sector and in particular small and medium-sized enterprises really pushed for interest rate capping. Large corporations were never really struggling with access to or the cost of credit, as they were able to access credit at relatively low interest rates of below 6-7%. If you look at the World Bank’s “Doing Business” indicators, we do well in terms of access to credit, but not on cost of credit. That’s why, though populist in nature, there was a push for capping in order to reduce costs. We should give the interest rate cap time to see whether it is a successful measure.
What steps can the private sector in Kenya take to help solicit greater inflows of foreign investment and promote growth?
KARIUKI: At the firm level companies are beginning to become much more sophisticated in terms of their governance and processes. That is something we would like to continue to push as being a key driver to attract foreign investment. The other thing is changing the narrative that comes out of the private sector. Today we rely too heavily on government to be the main communicator for business in the country; instead, I think the private sector needs to create and publicise its own narrative. Lastly, I believe that the private sector in Kenya needs to open up more and needs to take greater risks in terms of investment, financing, creating partnerships and so on.
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